I FIRST visited an American Apparel store two years ago when I was in Los Angeles for a Dom Perignon party hosted by Karl Lagerfeld. Given the glamorous circumstances, you can understand why I packed cocktail dresses rather than casual wear, but I neglected to throw in the all-important bikini for lounging by the hotel pool in between seemingly endless Dom Perignon drinks appointments (yes, it was a tough assignment).

Fortunately, an American Apparel store was just around the corner from my hotel, on Hollywood Boulevard in between a Starbucks (natch) and a Mexican takeaway. For someone who'd only bought American Apparel T-shirts online, it seemed like the quintessential experience of the LA-based casual wear company that epitomises west coast style.

I walked out with not just a swimsuit but six American Apparel Classic Girl T-shirts, two cotton sundresses and an oversized cotton tote, for a total of less than $US200.

I had succumbed to the irresistible appeal of American Apparel: classic cotton basics in a Pantone book of colours, moderately priced and without a logo or gratuitous slogan in sight. The formula has propelled the company into an extraordinary international success story. Founder Dov Charney opened his first shop in 2003 and now has 200 in 11 countries, selling casual clothes to men, women and children.

Australia is the latest country to join that list: an American Apparel store opened in Melbourne in March and a Sydney store opened two weeks ago.

An enormous floor-to-ceiling photograph of Charney hangs in the windows of the Sydney store. He looks like a '70s hipster porn star, all mutton chop sideburns, tight V-neck T-shirt and aviator glasses, and in a way he is. Charney has built his company through selling an unlikely mix of sex, social responsibility and T-shirts.

Avowedly anti-sweatshop, he pays the workers in his Los Angeles manufacturing plant fairly and offers them perks well above the industry average. Pay averages $US12 ($12.30) an hour, almost double California's minimum wage. American Apparel staff are entitled to subsidised meals, free English lessons and free parking. They can get subsidised health insurance for $8 a week, and their workspaces are well lit and ventilated. Charney has been praised for his treatment of his garment workers, but American Apparel's creative director Marsha Brady insists it's not bleeding heart.

"They deserve what we pay them," she says. "We could probably get workers for less from offshore but it brings other problems which are really not worth dealing with for us. It's not a marketing strategy; we do it because it works for us."

Whereas most casual fashion chains outsource manufacturing to factories in Asia, maintaining all production in Los Angeles gives Charney control over every aspect of hisbusiness.

"We've dedicated ourselves to creating a sustainable business model that takes responsibility for the entire cycle and chain of supply," Brady says. "Our product, our shops, our advertising, everything is entirely handled by us internally until the garment ends up in the hands of the end user."

Charney's approach to advertising is also unusual in an industry built on airbrushed perfection. He shoots all of the ad campaigns himself, using a mix of American Apparel staff and young people he scouts from the streets. They are typically photographed in sexual poses, often only half dressed, and always with all their lumps and bumps (although admittedly there are not many on his nubile subjects) left in.

"(Our customers) really appreciate our points of view about women and body image," Brady says. "We don't airbrush, we leave in hair, stubble, fat, and have not embraced artifice as most do. It's one of the main reasons our ads have gotten so much attention: they're natural, naive and seductive in a very human way."

The provocative nature of American Apparel's advertising has been allegedly echoed behind the scenes. Charney has been sued by four former employees for sexual harassment, which the company dismisses as sour grapes and a desire for personal gain.

"Everyone knows that lawsuits are something that happens once word is out that you've got a bit of financial success," Brady says. "It's kind of tainted the idea that suing is about protecting people's rights, it's more about testing the boundaries of the laws to find financial windfalls. Since there's no legal penalty for a failed suit, it's typical in America for people to just try it on."

Of course, customers trying on the T-shirts is another matter altogether. The beauty of American Apparel is its simplicity: the T-shirts, hoodies, underwear and separates can be mixed with anything from designer pieces to vintage store finds to express the unique personality of their wearer.

"We think of our products not so much as fashion but as art supplies," Brady says.

"You can use them to make any look you want. Our customers love fashion but don't necessarily love spending obscene amounts of money every few months on it.

"We don't do seasons or collections. We don't want to contribute to the idea of throwaway fashion. Our customers like knowing that they are supporting something that is ethical. Mostly, they like the way they feel in our clothes: comfortable and sexy."

Brady sees similarities between the laid-back Californian lifestyle and the way Australians dress and live, making our country an obvious choice as part of American Apparel's global expansion.

"Australians have an affinity with our products: they seem to love the casual and timeless style of our clothes," Brady says. "Australia has been on our radar for a very long time. It was one of the strongest markets for our international online store, and we received numerous emails from Aussies about opening up retail stores."

Both of the Australian locations -- Chapel Street in Melbourne and Oxford Street in Sydney -- are standalone stores rather than within shopping centres, in line with American Apparel's approach to opening international outlets.

"We don't have anything against malls," Brady says. "But street locations have something very free about them: they're adjacent little universes that together make a community. It's an urban environment that we're most comfortable with."

Charney built his business acumen up from the streets. At the age of five he started a lemonade stand on his street corner in Montreal, where he was born, and at eight he started his own newspaper, hawking ads and learning how to use a printing press.

When he studied at a Connecticut boarding school he bought American T-shirts such as Hanes and Champion to sell when he went home on holidays.

While retail is the most high-profile side of American Apparel, the company still draws most revenue from wholesale, selling blank T-shirts to screen printers.

"It's still true that 80 per cent of the garments we make end up at concerts," Charney has said.

But perhaps the most intriguing thing about American Apparel has been its ability to maintain an intimate feel of community and credibility as its stores number 200 across the world. As it continues to approach American chains such as Gap or Old Navy in terms of size, the key to its continued cool would appear to be Charney himself.

A genuine eccentric who is known to walk around the office in his underpants, Charney spends a considerable amount of time simply walking the streets in Los Angeles or New York, talking to young people about what they want from clothes and from life. The challenge will be to maintain this close connection with the customer as American Apparel continues to grow.

"Based on our present rate of growth, the opportunities are endless," Brady says. "We are producing a great product in a sustainable process and getting a huge response from all over the world.

"While we are always finetuning every process of our operations, we feel that if we stay true to the core values that the company was created with, we can't go wrong."